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THE SOCIALIST REPUBLIC OF VIETNAM

THE SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

THE NATIONAL ASSEMBLY

OF THE SOCIALIST REPUBLIC OF VIETNAM

IXth Legislature, 9th Session

(From March 2 to 20, 1996)

LAW ON THE STATE BUDGET

In order to exercise unified management of the national finance, to build a healthy State Budget, to enhance financial discipline, to economically and efficiently use the money of the State, to increase accumulation for national industrialization and modernization along the the socialist orientation, to meet the requirements of socio-economic development, to raise the living standard of the people, and to ensure national defense, security and external relations;

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam;

This Law provides for the establishment, implementation, accounting, examination of the State Budget and the tasks and powers of the State agencies at various levels with respect to the State Budget.

Chapter I

GENERAL PROVISIONS

Article 1.- The State Budget comprises all revenues and expenditures of the State in the draft that has already been decided by the competent State Agencies and implemented within one year in order to ensure the implementation of the functions and responsibilities of the State.

Article 2.-

1. The State Budget revenues include: revenues from taxes, fees and charges; revenues from economic activities of the State; contributions by organizations and individuals; aid; other revenues as stipulated by law; and borrowings by the State to make up for the overspending that are included in the balance of the State Budget.

2. The State Budget expenditures include: spendings on socio-economic development, on ensuring national defense, security, operations of the State apparatus; spending on the payment of State debts; on aid and other spendings as stipulated by law.

Article 3.- The State Budget shall be put under unified management on the principle of democratic centralism, transparency, assignment of responsibilities in association with assignment of powers, division of management between branches and levels.

The National Assembly shall decide the draft State Budget and the allocations of the State Budget; ratify the State Budget accounts.

Article 4.- The State Budget shall comprise the central budget and the budgets of the local administration at various levels (local budgets). The relations between the budget of various levels shall be established on the following principles:

1. The central budget and the budget of each level of local administration shall be determined according to the concrete sources of revenue and concrete spending tasks;

2. Additional allocation from the higher-level budget to the lower-level budget shall be made to ensure equality, balanced development among the regions and localities. This additional allocation shall be the revenue of the lower-level budget;

3. In case the higher-level State management agency authorizes the lower-level State management agency to carry out an expenditure that comes under the former�s responsibility, funds must be transferred from the higher-level budget to the lower-level budget for performing such task;

4. Except for the supplementary allocations to the revenue source and the authorized spending as stipulated in Clauses 2 and 3 of this Article, the budget of one level shall not be used to pay for the spending that belongs to the task of another level.

Article 5.-

1. The State Budget revenue shall be collected in accordance with provisions of this Law and other provisions of law.

2. State Budget expenditure shall be made only under the following conditions:

a) It has been included in the approved draft budget, except for cases stipulated in Articles 56 and 62 of this Law;

b) In conformity with the regulations, criteria and norms set by the competent State agency;

c) It has been approved by the heads of the budget-using units and others who are authorized to approve the spending.

In addition to the conditions specified in Points a, b and c of Clause 2 of this Article, if the expenditure is made for a work that requires bidding, bidding must be organized in accordance with prescriptions of the Government.

3. No branch, level or unit is allowed to institute any revenue or expenditure contrary to the provisions of law.

4. The financial agencies at various levels shall have to ensure the timely allocation of fund for expenditures; are entitled to refuse to pay for any spendings that fail to meet the conditions stipulated in Clause 2 of this Article and take responsibility for their decisions.

Article 6.- All State Budget revenues and expenditures must be fully accounted for in the State Budget.

Article 7.-

1. The State Budget Fund shall comprise all amounts of money of the State, including borrowed money which have been entered into the accounts of the State Budget of all levels.

2. The State Budget Fund shall be kept at the State Treasury.

Article 8.-

1. The State Budget shall be balanced in accordance with the principle that the total revenue from taxes, fees and charges must be bigger than the total regular spending and help to accumulate more and more for spending on development investment; in case of over-spending, the over-spent amount must be smaller than the amount spent on development investment and eventually to achieve balance between revenue and expenditure of the budget.

2. The borrowings to make up for the State Budget deficit must abide by the following principle: they must not be used for consumption; but only for development purposes; there must be a plan to recover the borrowed capital and ensure budget balance in order to pay the debt when it is due.

3. The local budgets shall be balanced in accordance with the principle that the total expenditure shall not exceed the total revenue; in case a province or city directly under the Central Government (hereafter referred to as province) needs an investment in infrastructure construction which comes under the scope of the provincial budget but which is beyond its ability to balance, such a province shall be allowed to mobilize domestic investment capital as provided for by the Prime Minister; but it must balance its own budget in order to be able to pay all debts when they are due.

Article 9.-

1. The draft expenditures of the central budget and of the local budget at various levels shall be entitled to include 3% to 5% of the total estimated spending to meet the requirements of unexpected spendings arising during the budget year.

2. The Government and the provincial People�s Committees shall be entitled to establish the financial reserve fund from sources such as revenue increases, budget remainder, and to include it in the annual budget expenditure estimate. The financial reserve fund shall be used to meet the requirements of spendings when the revenues have not been collected in time, but such spendings must be immediately reimbursed within the budget year, except for special cases stipulated by the Prime Minister.

The maximum of the financial reserve fund at each level shall be stipulated by the Government.

Article 10.- The issuance and implementation of new legal documents that increase budgetary spending or decrease budgetary revenue during the year must be assured by financial sources.

Article 11.- The State Budget shall ensure enough funds for the activities of the Communist Party of Vietnam and the socio-political organizations. The funds for the activities of social organizations and socio-professional organizations shall be implemented in accordance with the principle of self-procurement, the State Budget shall render support only in a number of specific cases provided for by the Government.

Article 12.- All properties to be invested, purchased with the State Budget sources and other properties of the State must be strictly managed in conformity with the prescribed regimes.

Article 13.-

1. The State Budget revenue and expenditure shall be accounted for in the Vietnam Dong (VND).

2. The accounting and account statement of the State Budget shall be uniformly carried out in accordance with the accountancy regime of the State and the List of the State Budget.

3. All forms for State Budget revenues and expenditures shall be issued and managed by the Ministry of Finance.

Article 14.- The budget year begins on the 1st of January and terminates on the 31st of December on the calendar year.

Chapter II

TASKS AND POWERS OF THE NATIONAL ASSEMBLY, THE STATE PRESIDENT, THE GOVERNMENT AND OTHER STATE AGENCIES, AND RESPONSIBILITIES AND OBLIGATIONSOF ORGANIZATIONS AND INDIVIDUALS REGARDING THE STATE BUDGET

Article 15.- Tasks and powers of the National Assembly:

1. To make laws and amend laws in the field of State Budget;

2. To decide the national financial and monetary policies in order to contribute to the economic development, ensure the balance between revenue and expenditure of the State Budget;

3. To decide the State Budget estimates with the total revenue, total expenditure, estimate of overspending and sources for compensation;

4. To decide the State Budget allocations according to each type of revenue and each domain of spending in accordance with the proportion between regular spending, development investment spending, and spending for debt payment. On the basis of the decision of the National Assembly on the annual State Budget, the National Assembly assigns the Standing Committee of the National Assembly the task of deciding the plan submitted by the Government on the allocation of the central budget to each ministry, each branch and the additional allocations from the central budget to each province or city directly under the Central Government, and reporting the plan to the National Assembly at its nearest session;

5. To decide the list of national programs and projects; key capital construction projects to be invested with capital from State Budget sources;

6. To decide the readjustment of the State Budget in necessary cases;

7. To supervise the implementation of the State Budget, the national financial and monetary policies, the National Assembly�s resolutions on the annual State Budget, national programs and projects, and key capital construction projects;

8. To ratify the final State Budget statement.

Article 16.- Tasks and powers of the Standing Committee of the National Assembly:

1. To promulgate legal documents in the budgetary field as assigned by the National Assembly;

2. To perform the task assigned by the National Assembly to decide the plan for the allocation of the central budget in accordance with provisions in Clause 4, Article 15 of this Law;

3. To supervise the implementation of the laws on budget, national financial and monetary policies, the National Assembly�s resolutions on the annual State Budget.

Article 17.- Tasks and powers of the National Assembly�s Economic and Budgetary Commission:

1. To examine the draft laws and ordinances and other drafts in the budgetary field;

2. To examine the draft State Budget and allocations, the reports on the implementation of the State Budget and the State Budget statement submitted by the Government to the National Assembly;

3. To examine the plan on the allocation of the central budget to each ministry, branch, and the supplementary allocations from the central budget to each province, city directly under the Central Government submitted by the Government to the Standing Committee of the National Assembly;

4. To supervise the activities of the Government, branches and levels in the implementation of the State Budget and the application of the laws on budget by organizations and individuals;

5. To make recommendations to the National Assembly on budgetary, financial and monetary matters.

Article 18.- Tasks and powers of the Nationalities Council and other Commissions of the National Assembly:

1. Within their respective tasks and powers, to cooperate with the National Assembly�s Economic and Budgetary Commission in examining the draft laws and ordinances and other drafts in the budgetary field submitted by the Government to the National Assembly and the National Assembly�s Standing Committee;

2. To supervise the enforcement of the law on budget and the implementation of the National Assembly�s resolutions on the State Budget within the areas under their jurisdiction.

Article 19.- Tasks and powers of the State President:

The State President shall discharge the tasks and powers as stipulated by the Constitution and law in signing and ratifying on behalf of the State of the Socialist Republic of Vietnam international treaties in the financial and monetary field.

Article 20.- Tasks and powers of the Government:

1. To submit to the National Assembly, the Standing Committee of the National Assembly draft laws and ordinances and other drafts on the State Budget; to promulgate legal documents on the State Budget in accordance with its authority;

2. To establish and submit to the National Assembly the draft State Budget and the allocations, plans on State Budget readjustment in case of necessity;

3. To establish and submit to the Standing Committee of the National Assembly the detailed plan on the allocation of the central budget;

4. On the basis of the resolutions of the National Assembly and the Standing Committee of the National Assembly to decide the assignment of tasks in the budget revenue and expenditure to each ministry and branch, the tasks in revenue, expenditure and the supplementary allocation from the central budget to each province or city directly under the Central Government;

5. To exercise unified management of the State Budget, ensure close co-ordination between the branches and local managerial agencies in implementing the State Budget;

6. To organize and examine the implementation of the State Budget; to report to the National Assembly and the Standing Committee of the National Assembly on the implementation of the State Budget, national programs and projects and key capital construction projects;

7. To set forth principles and methods for the calculation of the supplementary allocation of revenue from the higher level budget to the lower level budget;

8. To set forth regulations on the use of the reserve fund from the State Budget and managing the financial reserve fund;

9. To set forth or authorize the competent State Agency to set forth regimes, criteria, levels of State Budget expenditures for uniform application throughout the country;

10. To examine the resolutions of the People�s Councils on budget drafting and budget accounts;

11. To establish and submit to the National Assembly the accounts of the State Budget, the accounts of key capital construction projects of the State.

Article 21.- Tasks and powers of the Ministry of Finance:

1. To prepare draft laws, ordinances and other drafts in the field of State Budget to be submitted to the Government; to issue legal documents on the State Budget within its jurisdiction;

2. To take responsibility before the Government for performing the function of unified management of the State Budget:

a) To exercise unified management and direct the collection of taxes, fees, charges and other revenues of the State Budget;

b) To exercise unified management of the borrowing and debt repayment by the Government, exert financial management of the sources of international aid;

c) To guide and examine the implementation of the State Budget; organize the collection of revenues for the State Budget and allocation of State Budget expenditures; to provide preferential loans or financial assistance to socio-economic projects and programs of the State in accordance with provisions of the Government.

3. To guide and examine the drafting of the annual State Budgets of the ministries, other central agencies and localities; to co-operate with the related agencies at central and local levels in drafting the State Budget, allocate the State Budget and plans on the allocation of the central budget to be submitted to the Government; propose measures aimed at implementing the policy of increasing revenue, and making economical use of the State Budget;

4. To preside over and in co-operation with the ministries and branches to establish regimes, criteria and levels for the State Budget expenditure to be submitted to the Government for decision, or to make the decision itself in accordance with the assignment of authority by the Government for uniform application throughout the country;

5. To conduct financial inspection and examination regarding all economic organizations, administrative and non-business units and other units which are obliged to make contributions to the State Budget or which use the State Budget;

6. To manage the State Budget funds and other funds of the State;

7. To draw the accounts of the central budget, to consolidate and draw the State Budget accounts to be submitted to the Government;

8. To organize the management and examination of the use of the State properties.

Article 22.- Tasks and powers of the Ministry of Planning and Investment:

1. To submit to the Government the draft plan on socio-economic development of the whole country and the major balances of the national economy, including the balances of finance, money, capital construction investment fund, to serve as basis for the elaboration of the financial and budgetary plans;

2. To cooperate with the Ministry of Finance in drafting the budget and plans on the allocation of the State Budget in areas under its charge;

3. To cooperate with the Ministry of Finance and the concerned ministries and branches in examining and evaluating the efficiency of investment capital for capital construction projects.

Article 23.- Tasks and powers of the Vietnam State Bank:

1. To cooperate with the Ministry of Finance in the establishment of the State Budget estimates regarding the plans and projects of borrowing to make up for State Budget over-spending;

2. To make advance payment to the State Budget so as to handle the temporary deficit of the State Budget fund in accordance with the Prime Minister�s decision.

Article 24.- Tasks and powers of Ministries and branches:

1. To cooperate with the ministry of Finance, the provincial People�s Committees in the process of establishing and allocating the State Budget, drawing the State Budget accounts of the branches and areas under their charge;

2. To cooperate with the Ministry of Finance in examining and monitoring the implementation of the budget of the branches and areas under their charge;

3. To report on the implementation and results of the budget utilization by the branches and in areas under their charge in accordance with the stipulated regime;

4. To cooperate with the Ministry of Finance in establishing regimes, criteria, levels of spending of the State Budget of the branches and areas under their charge.

Article 25.- Tasks and powers of the People�s Council and People�s Committee:

1. The People�s Council:

a) To decide the local draft budget and allocation of budget; to ratify the local budget accounts;

b) To decide policies and measures to implement the local budget;

c) To decide the readjustment of the local budget estimates in case of necessity;

d) To supervise the implementation of the budget that has been decided by the People�s Council;

e) The provincial People�s Council, in addition to the tasks and powers provided for in Points a, b, c and d of Clause 1 of this Article, shall also be entitled to make decision on the collection of fees, charges, surcharges and other contributions by people in accordance with the provisions of law; to decide the assignment of authority to spend on investment in the construction of socio-economic infrastructure projects of the locality submitted by the People�s Committee of the same level.

2. The People�s Committee:

a) To draft the local budget and draw up the plan on its allocation, the plan on readjustment of the local budget in case of necessity, submit it to the People�s Council of the same level for decision, and report to the immediate higher State administrative agency and financial agency;

b) To make the local budget accounts to submit to the People�s Council of the same level for ratification, and to report to the immediate higher State administrative agency and financial agency;

c) To examine the Resolution on the draft budget and the budget accounts by the lower level People�s Council;

d) Basing itself on the Resolution of the People�s Council of the same level, to assign the tasks of budget collection and expenditure to each attached agency and unit; the tasks of collection and expenditure and the level of supplementary allocation to the lower-level budget;

e) To organize the implementation of the local budget;

f) To cooperate with the superior State agencies in managing the State Budget within its territory;

g) To report on the State Budget in accordance with the provisions of law;

h) The provincial People�s Committee, in addition to the tasks and powers provided for in Points a, b, c, d, e, f and g of Clause 2 of this Article, shall also have the task of formulating and submitting to the People�s Council for decision issues stipulated in Point e, Clause 1 of this Article.

Article 26.- Tasks and powers of the State Budget drafting units:

1. To organize the drafting of budget revenues and expenditures within the assigned scope;

2. To organize the implementation of the assigned plans for budget revenue and expenditure; to pay fully and in time the remittances to the budget in accordance with the provisions of law; to spend in conformity with the regimes, purposes, objects and in an economical manner;

3. To guide and examine the implementation of the plans for budget revenues and spendings of the attached units;

4. To manage and use the State properties at the units in conformity with the regimes and purposes and in an efficient manner;

5. To strictly adhere to the regimes of accountancy and statistics of the State; to report on the implementation of the budget plan and draw the budget accounts in accordance with the prescribed regime.

Article 27.- Organizations and individuals shall have the responsibilities and obligations:

1. To pay fully and in time the taxes, fees, charges and other revenues to the budget in accordance with provisions of law;

2. In case they are allocated capital and funds by the State in accordance with the approved draft budget, they shall have to manage and use those capital and funds for the right purposes, in accordance with the regimes and in an economical and efficient manner;

3. To properly observe the regime of accountancy and statistics of the State.

Chapter III

SOURCES OF REVENUES, SPENDING TASKS OF THE BUDGET OF DIFFERENT LEVELS

Article 28.- The sources of the central budget revenues shall comprise:

1. The revenues to be 100% collected:

a) Export tax, import tax;

b) Special consumption tax;

c) Profit tax of units where accounting applies to the whole service;

d) Taxes and other revenues from the petroleum industry to be paid to the central budget in accordance with Government regulations;

e) Profit from capital contributed by the State, State capital recovered at economic establishments, recovered State loans (principal and interest), revenues from the State reserve fund;

f) The Government�s borrowings; non-refund aid granted by foreign governments, organizations or individuals to the Government in accordance with provisions of law;

g) Fees, charges and other revenues contributed to the central budget in accordance with Government regulations;

h) Revenues from the balance of the central budget;

i) Other revenues in accordance with provisions of law.

2. The revenues divided in percentage (%) between the central budget and the provincial budget:

a) Turnover tax;

b) Profit tax, excluding profit tax of the units under the whole-branch accounting system;

c) Income tax from high-income earners;

d) Taxes on transfer of profits abroad;

e) Natural resource tax;

f) Tax on the use of budget capital.

Article 29.- The spending tasks of the central budget shall comprise:

1. Regular spendings on:

a) Non-business activities in the fields of education, training, health-care, social affairs, culture, information, physical training and sports, science, technology and environment and other operations managed by the central agencies;

b) Non-business and economic operations managed by the central agencies;

c) National defense, security and social order and safety, excluding the portion allocated to the locality;

d) Operations of the central agencies of the State and the Communist Party of Vietnam and socio-political organizations;

e) Price subsidies in accordance with the State policies;

f) National programs managed by the Central Government;

g) Support for the social insurance fund as provided for by the Government;

h) Subsidies to people entitled to the social policies managed by the Central Government;

i) Financial support for social organizations and socio-professional organizations at the central level in accordance with provisions of law;

j) Payments for the interests of Government borrowings;

k) Aid;

l) Other expenditures as stipulated by law.

2. Spendings on development investment:

a) Investment in construction of socio-economic infrastructure projects managed by the central level without possibility of capital recovery;

b) Investment and capital support for State enterprises; contribution of stock capital to joint ventures with enterprises in areas that need the participation of the State in accordance with provisions of law;

c) Spending on the National Investment Support Fund and Development Support Funds for economic development programs and projects;

d) The State reserve.

3. Spending on payment of principals of Government borrowings.

4. Spending on supplementing the financial reserve fund.

5. Spending on supplementing the lower-level budgets.

Article 30.- The revenue sources of the provincial budget shall include:

1. The revenues to be 100% collected;

a) Land rent;

b) Revenues from the leasing and sale of dwelling houses owned by the State;

c) Registration fees;

d) Revenues from State-run lotteries;

e) Non-refund aid donated directly by foreign organizations and individuals to the province in accordance with provisions of law;

f) Fees, charges and other revenues to be contributed to the provincial budget in accordance with the provisions of the Government;

g) Money mobilized from organizations and individuals to invest in construction of infrastructure projects in accordance with provisions of the Government;

h) Voluntary contributions from domestic and foreign organizations and individuals to the provincial budget;

i) Revenues from the balance of the provincial budget;

j) Supplementary allocation from the central budget;

k) Other revenues as provided for by law.

2. Revenues divided in percentage (%) between the central budget and the provincial budget:

a) Turnover tax;

b) Profit tax, excluding profit tax of units where accounting is done in all the service;

c) Income tax from high-income earners;

d) Tax on remittance of profits abroad;

e) Natural resources tax;

f) Tax on the use of budget capital.

3. Revenues divided in percentage (%) between the provincial budgets, budgets of districts, precincts, provincial towns and cities (referred to as the district�s budget) and the budgets of communes and townships:

a) Tax on the use of agricultural land;

b) Tax on the transfer of land use right;

c) House and land taxes;

d) Land rent.

Article 31.- The spending tasks of the provincial budget shall include:

1. Regular spending on:

a) Non-business activities in the fields of economy, education, training, health-care, culture, information, physical training and sports, social affairs, science, technology and environment and other non-business operations managed by the provincial agencies;

b) The tasks of national defense, security and social order and safety, assigned to the province;

c) Activities of the agencies of the State, the Communist Party of Vietnam, and socio-political organizations at provincial level;

d) Financial support for the provincial social organizations and socio-professional organizations in accordance with provisions of law;

e) Implementation of social policies managed by the province;

f) The national programs assigned by the Government to the province for management;

g) Price subsidies in accordance with State policies;

h) Payment of interests on borrowings for investment as stipulated in Clause 3, Article 8 of this Law;

i) Other expenditures in accordance with provisions of law.

2. Spending on development investment:

a) Investment in the construction of socio-economic infrastructure projects managed by the province;

b) Investment and capital support for State enterprises in accordance with provisions of law;

3. Spending for payment of principals of the borrowings for investment as stipulated in Clause 3, Article 8 of this Law.

4. Spending on supplementing the financial reserve fund.

5. Spending on supplementing lower-level budgets.

Article 32.- The revenue sources of the district budget include:

1. The revenues to be 100% collected:

a) Trade license tax, excluding trade license tax on small business households in communes and townships;

b) Slaughter tax collected from animal-slaughtering businesses located in the ward�s territory;

c) Fees and charges from activities of agencies under the district�s management;

d) Money collected from non-business operations of units managed by the district;

e) Non-refund aid granted by foreign organizations and individuals directly to the district in accordance with provisions of law;

f) Contributions by organizations or individuals to invest in the construction of infrastructure projects in accordance with provisions of the Government;

g) Voluntary contributions by domestic and foreign organizations or individuals to the district�s budget;

h) Revenue from the balance of the district�s budget;

i) Supplements from the provincial budget;

j) Other revenues as provided for by

law.

2. Revenues to be divided in percentage (%) between the provincial budget, province, district budgets and the budgets of communes and townships:

a) Tax on agricultural land use;

b) Tax on transfer of land use right;

c) House and land taxes;

d) Land use charge.

3. In addition to the revenues provided for in Clauses 1 and 2 of this Article, the provincial towns and cities are also given an additional percentage of turnover tax, profit tax, registration fees collected in their respective territory and are entiled to establish their own investment funds in accordance with provisions of the Government.

Article 33.- The spending tasks of the district�s budget shall include:

1. Regular spending on:

a) Non-business activities in the fields of economy, culture, information, sports and social affairs and other non-business activities managed by the district agencies;

b) The tasks of national defense, security and social order and safety, assigned to the district;

c) The activities of the agencies of the State, the Communist Party of Vietnam and socio-political organizations at district level;

d) Financial support for district social organizations and socio-professional organizations in accordance with provisions of law;

e) Other spendings as provided for by law;

f) In addition to the spending tasks provided for in Points a, b, c, d, e of Clause 1 of this Article, the provincial towns and cities under the provincial management shall also assume the tasks of spending on the management, repair and maintenance of public works and on urban non-business operations.

2. Spending on development investment:

Spending on investment in socio-economic infrastructure projects of the provincial level in accordance with the division of responsibility. The provincial towns and cities shall be tasked with the spendings on investment in the construction of public general education schools of all levels and public utility projects such as lighting, water supply and drainage, inner city transportation, traffic safety, urban sanitation.

3. Spending on supplementing lower-level budgets.

Article 34.- The revenue sources of the commune and township budgets shall include:

1. The revenues to be 100% collected:

a) The trade license tax on small business households;

b) Animal slaughtering tax;

c) Fees, charges and contributions to be collected for the commune or township budget in accordance with provisions of law;

d) Revenues from the use of the public land fund and profits from other public properties;

e) Money collected from non-business operations managed by the commune or township;

f) Voluntary contributions to the commune and township;

g) Non-refund aid directly donated by foreign organizations and individuals to the commune or township in accordance with provisions of law;

h) Revenue from the balance of the commune or township budget;

i) Supplementary allocation from the higher-level budget;

j) Other revenues in accordance with provisions of law.

2. Revenues divided in percentage (%) between the provincial budget, the district budget, and the commune or township budget:

a) Tax on agricultural land use;

b) Tax on transfer of land use right;

c) House and land taxes;

d) Land use charge.

Article 35.- The spending tasks of the commune or township budgets:

1. Regular spending on:

a) Social work and activities in the fields of culture, information and sports managed by the commune or township;

b) Financial support for extracurricular education, creches and kindergartens managed by the commune or township;

c) Health care activities in the commune or township;

d) Management, repair or maintenance of architectural projects, public properties, welfare projects and roads managed by the commune or township;

e) Activities of the agencies of the State, the Communist Party of Vietnam and socio-political organizations of the commune or township;

f) Militia and self-defense work; maintenance of social order and safety in the commune or township;

g) Other spendings in accordance with provisions of law.

2. Spending on development investment:

Spending on investment in the construction of socio-economic infrastructure projects in accordance with the assignment of responsibilities by the province.

Article 36.- In addition to the revenues and expenditures provided for in Articles 34 and 35 of this Law, the commune or township administration shall be entitled to mobilize contributions from organizations or individuals for investment in the construction of infrastructure projects of the commune or township on the principle of voluntariness. The management of such contributions shall be carried out in a transparent way, subject to examination and control so as to ensure that they shall be used for the right purposes and in accordance with regimes provided for by law.

Article 37.- The revenue sources of the ward budget shall include:

1. Fees, charges and contributions to the ward budget in accordance with provisions of law;

2. Animal slaughtering tax, excluding animal slaughtering tax collected from animal slaughtering enterprises;

3. Voluntary contributions from organizations or individuals to the ward;

4. Non-refund aid from foreign organizations or individuals directly to the ward in accordance with provisions of law;

5. Revenue from the balance of the ward budget;

6. Supplementary allocation from the higher-level budget;

7. Other revenues as provided for by law.

Article 38.- The tasks of spending by the the ward budget shall include:

1. Spending on social work and activities in the fields of culture, information and sports managed by the ward;

2. Spending on militia, self-defense, social order and safety work in the ward;

3. Spending for the operation of the agencies of the State, the Communist Party of Vietnam and socio-political organizations at ward level;

4. Other spendings as provided for by law.

Article 39.- The Government shall stipulate in details the percentage (%) of revenues to be divided as provided for in Clause 2, Article 28 of this Law between the central budget and the budget of each province and city directly under the Central Government. The provincial People�s Committee shall stipulate in details the percentage (%) of revenue to be divided as provided for in Clause 3, Article 30, Clauses 2 and 3, Article 32, and Clause 2, Article 34 of this Law between the provincial budget and the budget of each district, precinct, provincial town and city and the budget of each commune and township.

The percentage (%) of revenue to be apportioned to each level shall be kept stable for 3 to 5 years.

Article 40.-

The supplementary allocation from the higher-level budget to the lower-level budget to balance budget revenue and expenditure and to ensure the implementation of the assigned socio-economic tasks shall be determined on the basis of the calculation of revenue sources and spending tasks stipulated in Articles 28, 29, 30, 31, 32, 33, 34, 35, 37 and 38 of this Law in accordance with the norms such as population, natural conditions, socio-economic conditions of each region, with attention paid to remote areas, former revolutionary bases, areas of ethnic minorities and areas facing difficulties. Such supplementary allocations shall be kept stable for 3 to 5 years. Every year, in case of inflation, the Government shall, on the basis of the supplementary allocations decided by the Standing Committee of the National Assembly, decide the increase percentage proportional to the inflation rate in calculating the supplementary allocation to the lower-level budgets.

Article 41.- The Government shall stipulate the readjustment of revenues and expenditures of each budgetary level, decide the percentage of revenue division between the central budget and the provincial budget and the supplementary allocation from the central budget to the budgets of provinces and cities directly under the Central Government and report to the National Assembly, the Standing Committee of the National Assembly in the following special cases:

1) There is an urgent demand in terms of national defense and security;

2) There are major changes in the budget revenues and expenditures compared to those already allocated.

Chapter IV

DRAFTING STATE BUDGETS

Article 42.-

1. The annual State Budget shall be drafted on the basis of the tasks of socio-economic development and the assurance of national security and defense.

2. The revenues in the draft budgets must be determined on the basis of economic growth and provisions of law regarding budget revenues.

3. The expenditures in the draft budgets must be determined on the basis of the socio-economic development targets, the State management and the assurance of national security and defense. For the regular spendings, the drafts must be made on the basis of the sources of revenues from taxes, fees, charges and in compliance with the regimes, norms and levels stipulated by the competent State agencies.

Article 43.-

1. Annually, the Prime Minister shall decide the elaboration of socio-economic plans and the draft State Budget for the following year.

2. On the basis of the Prime Minister�s decisions, the Ministry of Finance shall provide guidance on the requirement, content and time-limit for drafting the State Budget and the control number of the draft State Budget.

Article 44.-

1. The agencies or units responsible for budget revenues and expenditures shall organize the drafting of budget revenues and expenditures within their assigned tasks and send them to the financial agencies of the same level.

2. The local financial agencies of various levels shall consider the draft budgets of the agencies and units of the same level and draft budgets of the lower-level adminitration, to consolidate and make the draft budgets and plans on their allocation and submit them to the People�s Committee of the same level.

3. The People�s Committee shall have to make the local draft budgets and plans on their allocation and submit them to the People�s Council of the same level for decision and report to the immediate higher State administrative agencies and financial agencies.

Article 45.- The Ministry of Finance shall consider the draft budgets of the central agencies and of the localities; consolidate and make the general draft State Budget and submit it to the Government.

Article 46.- During the process of consolidation and drafting the budgets, the financial agencies of various levels shall have the responsibility to:

1. Work with budget drafting agencies and units of the same level and the lower-level People�s Committee so as to readjust necessary points in the draft;

2. Recommend measures to ensure the budget balance as provided for in Article 8 of this Law.

During the process of drafting the State Budget, if there is divergence of views between the Ministry of Finance and other central agencies or the localities, the Ministry of Finance shall report to the Government or the Prime Minister for decision in accordance with the assigned authority. This principle shall also apply during the process of drafting local budgets at all levels.

Article 47.- The draft State Budgets and budget allocations according to each type of revenue, each area of spending and the ratio between regular spending, development investment spending and debt payment spending to be submitted to the National Assembly shall be attached with documents on the following issues:

1. The situation of the implementation of the State Budget in the preceding year, grounds for drafting the State Budget, basic contents and solutions aimed at materializing the draft State Budget;

2. The spending tasks of the State Budget in which the important targets and programs of the national economy and major policies of the Party and State related to the State Budget shall be specified;

3. The tasks of the State Budget revenues, accompanied by solutions aimed at mobilizing revenues for the State Budget;

4. The State Budget overspending and compensation sources; the rate of overspending compared with the Gross Domestic Product;

5. Report on the State�s debts, in which the amounts of due debt, overdue debt, amounts of interest to be paid during the year, the debts that will result from compulsory borrowings to compensate for the State Budget overspending, the capability to repay debts during the year and the amount of debts by the year-end shall be specified;

6. Specific policies and measures aimed at stabilizing finance, currency and the State Budget;

7. List of investment projects for key capital construction works to be built with State Budget sources;

8. Other documents to explain the projected State Budget revenues and expenditures.

Article 48.- The draft State Budget for the following year shall be handled to the National Assembly deputies ten days at the latest before the opening of the year-end session of the National Assembly of the previous year.

Article 49.- The necessary documents attached to the local draft budgets to be submitted to the People�s Council shall be stipulated by the Government.

Article 50.-

1. The National Assembly shall decide the draft State Budget for the following year before the 30th of November of the previous year.

2. In case the draft State Budget is not yet decided by the National Assembly, the Government shall re-draft the State Budget and submit it to the National Assembly at a date to be decided by the National Assembly.

3. The People�s Council shall, on the basis of the revenue sources and spending tasks already delegated to the locality and the current regimes and policies, decide the local draft budgets at the time provided for by the Government.

Article 51.- The allocation of the central and local budgets for the following year to the budget using units shall be completed before the 31st of December of the previous year.

Article 52.- During the process of discussion and making decision on the draft budget, the National Assembly and the People�s Councils, when deciding the draft budget on increased expenditures or new expenditures, shall at the same time consider and decide the solutions to ensure the budget balance.

Article 53.- The Prime Minister, the President of the higher-level People�s Committee shall be entitled to request the lower-level People�s Council to readjust the draft budget if the disposition of the local draft budget does not conform with the decision of the National Assembly or the higher-level People�s Council.

Article 54.- The Government shall stipulate in details the time-table for the drafting of the State Budget and its allocation.

Chapter V

IMPLEMENTATION OF THE STATE BUDGET

Article 55.- Upon receiving the budget allocations, the State agencies and budget drafting units shall distribute to the attached units the right draft budget allocations; and at the same time they shall inform the financial agencies of the same level and the State Treasury of the place of transaction in order to monitor, supply and manage. No organization or individual other than the budget allocating agency shall be allowed to change the already allocated budgetary tasks.

Article 56.- If at the beginning of the budget year, the draft budget and budget allocation are not yet decided by the competent State agencies, the financial agencies of various levels shall be entitled to temporarily provide funds for the spending requirements that cannot be delayed until the draft budgets and budget allocations are decided.

Article 57.-

1. The State agencies shall, within their tasks and powers, put forth necessary measures to ensure the fulfilment of the assigned tasks regarding budget revenues and expenditures, the practice of thriftiness, fight against wastefulness and embezzlement and strict observance of economic discipline.

2. The budget drafting units, organizations and individuals shall have to fulfill their obligations of making contributions to the budget in accordance with provisions of law; to use the State Budget finance for the right purposes, in accordance with regulations, and in an economical and efficient manner.

Article 58.-

1. The financial agencies of various levels shall, within their tasks and powers, have to supervise and control the organizations and individuals that are obliged to contribute to the budget to make full and timely contributions to the State Budget; in case of delayed contribution without justifiable reasons, the banks and State Treasury shall, at the request of the provincial agencies, make deductions from the deposit accounts of the organizations, individuals that have delayed their contributions to pay to the State Budget or apply other administrative measures to collect for the budget.

2. Regular and periodic expenditures must be met by funds distributed through the year; seasonal spendings or big purchases shall have to be planned with the financial agencies so that they can take the initiative in disposing the funds.

Article 59.-

1. Only the taxation agency and agency to which the State assigns the task of budgetary revenue collection (hereafter referred to as the collecting agency) shall be entitled to organize State Budget revenue collection.

2. The collection agency shall have the following tasks and powers:

a) To cooperate with the concerned State agencies to organize the collection in conformity with law; be subject to the guidance and control of the People�s Committee and supervision by the People�s Council with regard to budget revenue collection in the locality; cooperate with the Vietnam Fatherland Front and its member organizations in campaigning among organizations and individuals for fulfilling their obligations of budget contribution in accordance with provisions of this Law and other provisions of law;

b) To examine and control the revenue sources of the State Budget;

c) To determine and inform organizations and individuals of the amounts of taxes or revenues to be paid to the State Budget;

d) To inspect the discharge of the task of collection and payment to the State Budget, and handle acts of violation in accordance with provisions of law.

3. All budget revenues shall be paid directly to the State Treasury. In special cases the collecting agency shall be permitted to organize direct collection, but have to make timely and full payment to the State Treasury in accordance with provisions of the Minister of Finance.

Article 60.- The allocation of the State Budget expenditures shall be carried out in accordance with the following provisions:

1. On the basis of the assigned draft State Budgets, the budget using units shall draw up their spending plans and send them to the financial agency of the same level and the State Treasury at the place of transaction with a view to the timely disposal of funds;

2. The financial agency shall consider the spending plan of the unit and on the basis of the capability of the budget, arrange the quarterly spending plans, and notify the unit with a view to implementation;

3. On the basis of the spending plan announced by the financial agency, the head of the budget using unit shall issue the approval order, and the State Treasury shall examine the legality of the necessary documents as provided for by law and carry out the supply and payment;

4. All the State Budget expenditures shall be implemented when all conditions provided for in Clause 2, Article 5 of this Law are met and in accordance with the principle of direct payment from the State Treasury. The Minister of Finance shall provide detailed guidance on the implementation of this principle.

Article 61.- All acts to increase the spending on the salary fund that has already been written in the approved draft budget, except for cases permitted by the competent authority, are prohibited.

Spending on capital construction investment shall be supplied fully and in conformity with the planned tempo within the assigned plan. Other expenditures shall only be readjusted within the allocated draft budgets and in accordance with provisions of the Government, except for the cases provided for in Clauses 2 and 3, Article 62 of this Law.

Article 62.- During the implementation of the State Budget, change in revenue and expenditure (if any), shall be carried out as follows:

1. The increase in the revenue and the savings from the expenditure, as compared with the approved estimates can be used to reduce overspending, increase spending on debt payment or supplement the financial reserve fund and to increase other necessary expenditures as provided for by the Government;

2. In case the revenue is lower than the approved estimates, the Prime Minister or the President of the People�s Committee shall be allowed to make adjustments to reduce some corresponding expenditures, and at the same time report it to the Standing Committee of the National Assembly and the National Assembly, the People�s Council of the same level at the nearest session;

3. In case unexpected spendings are required which are higher than the estimate but which can neither be delayed nor met by contingency reserve, the Prime Minister or the President of the People�s Committee shall rearrange all the expenditures in the assigned draft budgets so as to have the necessary sources to meet such unexpected spending requirements;

4. Annually, in case of an increase in the revenue from export tax, import tax and special consumption tax over the assigned revenue, the Government shall decide to channel a percentage (%) of such increase to the provincial budget to invest in the construction of infrastructure projects but shall report it to the Standing Committee of the National Assembly;

5. In case of temporary deficit of the State Budget fund, the financial reserve fund shall be used for remedy. For the central budget, if the financial reserve fund fails to settle the deficit, the State Bank shall make advance payment to the central budget as decided by the Prime Minister.

The advance payment from the financial reserve fund to the budgets of various levels and advance payment from the State Bank to the central budget shall be reimbursed within the budget year, except for special cases to be decided by the Prime Minister.

Article 63.- The budget using units shall have to make periodical reports on the implementation of the State Budget to be sent to financial agencies in accordance with provisions of law. In case of violation of the reporting regime, the financial agencies shall be entitled to temporarily suspend the supply of fund until they receive the reports.

Chapter VI

ACCOUNTANCY AND FINAL STATE BUDGET ACCOUNTS

Article 64.- The organizations and individuals responsible for the State Budget revenue and expenditure shall have to organize the accounting, reporting and making budget accounts in accordance with the State regime of accountancy.

Article 65.-

1. At the end of the budget year, the Minister of Finance shall provide guidance on closing the book of accounts and making the final budget accounts in conformity with the contents specified in the approved estimates of the year and the List of State Budget.

2. All revenues of the preceding years� budgets paid in the following year must be entered in the following year�s budget. Expenditures from the preceding year�s budget which are not yet carried out shall be included in the following year�s draft budgets only when a competent agency so decides.

Article 66.- Fifty percent of the allocation from the central budget or provincial budget shall be transferred to the financial reserve fund, the other fifty percent shall be transferred to the following year�s budget; if the financial reserve fund has reached the required limit, the remaining amount shall be transferred to the following year�s budget. The balance of the district, commune, township or ward budget shall be carried over to the following year�s budget.

Article 67.-

1. On the basis of the guidance of the Minister of Finance, the heads of the units tasked with budget revenue and expenditure shall establish their respective units� accounts of revenues and expenditures to be submitted to the immediate higher managerial body.

2. The data of the accounts shall be compared and certified by the State Treasury at the place of transaction.

3. The heads of the higher-level budget drafting units shall have to examine and approve the budget revenue and expenditure accounts of the units directly under their management, to establish the balance sheet of the budget revenues and expenditures under their management and send them to the financial agencies of the same level.

Article 68.-

1. The local financial agencies at various levels shall consider and approve budget revenue and expenditure accounts of agencies of the same levels, examine the budget accounts of lower-level, to consolidate and establish the accounts of the local budget to be submitted to the People�s Committee of the same level for consideration and the People�s Council of the same level for ratification, and report to the immediate higher State administrative agencies and financial agencies.

2. The Ministry of Finance shall consider and approve budget revenue and expenditure accounts of central agencies, examine the accounts of the local budgets; consolidate and establish the accounts of the State Budget to be submitted to the Government for consideration and to the National Assembly for ratification.

Article 69.- The Prime Minister shall direct the organization of auditing of the accounts of the State Budget before it is submitted to the competent State agency for ratification.

Article 70.-

1. The National Assembly shall consider and ratify the State Budget accounts; the People�s Council shall consider and ratify the accounts of the local budget.

2. In case the budget accounts are not yet ratified by the National Assembly or the People�s Council, the Government or the People�s Committee shall, within their tasks and powers, and the State Auditing agencies which have audited, continue to clarify issues raised by the National Assembly or the People�s Council so as to submit them to the National Assembly or the People�s Council at a date to be decided by the National Assembly or the People�s Council.

Article 71.- During the process of examination, consideration and approval of the budget revenue and expenditure accounts, the following requirements must be met:

1. The revenues collected not in accordance with provisions of law shall be returned to the organizations or individuals that have paid them; all the compulsory revenues that have not been collected shall be fully collected for the State Budget;

2. Expenditures made not in accordance with provisions of law shall be recovered for the State Budget.

Chapter VII

EXAMINATION, INSPECTION, REWARD AND HANDLING OF VIOLATIONS

Article 72.- Within their tasks and powers, State management agencies and budget drafting units shall have the responsibility to examine the implementation of regimes on budget revenue, expenditure and management.

Article 73.- The State Audit Agency is an agency under the Government which carries out the auditing to determine the correctness, legality of the account data, accounts statements of State agencies and units tasked with State Budget revenues and expenditures as provided for by the Government.

Article 74.-

1. In exercising its tasks, the State Audit agency shall be independent and take responsibility before law for its conclusions.

2. The State Audit agency shall have to report the audit results to the Government and, if requested, to the National Assembly or the Standing Committee of the National Assembly. When the National Assembly or the Standing Committee of the National Assembly request audit by the State Audit Agency, the latter shall have to carry it out and report the results.

Article 75.-

1. The financial inspectors shall have the task of inspecting the observance of law on budget revenues, expenditures and management by organizations and individuals.

2. The tasks and powers of the financial inspectors over the establishment, implementation and account statements of the budget shall be carried out in accordance with provisions of law.

Article 76.- The organizations and individuals that record achievements in implementing the State Budget shall be rewarded in accordance with provisions of law.

Article 77.- The following acts shall be regarded as violations of the law on the budget:

1. Concealing revenue sources, place revenue outside the budget, delay or fail to perform the obligation of payment to the budget;

2. Permitting the exemption or reduction of budget payments, which is contrary to provisions or authority;

3. Taking advantage of position and powers to appropriate or cause damage to the revenue sources of the State Budget and properties;

4. Collecting revenues not in accordance with provisions of law, making expenditures not for the right purposes, and not in accordance with approved draft budget, causing losses to the budget finance;

5. Carrying out the accounting contrarily to the State regime of accountancy and the List of State Budget causing damage to the State Budget;

6. Other acts of violation of provisions of the law on budget.

Article 78.- The organizations and individuals that commit acts of violation of the law on budget, causing losses to the budget and properties of the State shall have to make compensation; depending on the nature and the seriousness of the violation, the offenders shall be subject to disciplinary measures, administrative sanctions or examined for penal liability in accordance with provisions of law.

Article 79.- All organizations and individuals shall be entitled to lodge complaints, institute legal proceedings, denounce acts of violation of the law on budget. The lodging of complaints, the instituting of legal proceedings and the denunciations and their handling shall be implemented in accordance with provisions of law.

Chapter VIII

IMPLEMENTATION PROVISION

Article 80.- On the basis of the provisions of this Law, the Prime Minister shall provide for the management and use of the State Budget and properties regarding certain operations in the field of national defense and security.

Article 81.- This Law takes effect from the 1997 budget year. All previous provisions contrary to this Law are annulled.

The State Budget revenues, expenditures and accounts and issues arising from the implementation of the State Budget prior to the entry into force of this Law shall be applied in accordance with the laws currently in force.

Article 82.- The Government shall adopt detailed regulations for the implementation of this Law.

This Law was adopted by the National Assembly of the Socialist Republic of Vietnam, IXth Legislature, 9th Session on March 20, 1996.

The Chairman of the National Assembly

NONG DUC MANH